# How to calculate discount factor for a loan?

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Date created: Thu, Dec 24, 2020 3:21 PM
Date updated: Thu, Jun 23, 2022 1:31 AM

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Video answer: Ex: simple interest discounted loan ## Top best answers to the question «How to calculate discount factor for a loan»

For example, to calculate discount factor for a cash flow one year in the future, you could simply divide 1 by the interest rate plus 1. For an interest rate of 5%, the discount factor would be 1 divided by 1.05, or 95%.

• Discount Factor Formula – Example #1 We have to calculate the discount factor when the discount rate is 10% and the period is 2. Discount Factor is calculated using the formula given below Discount Factor = 1 / (1 * (1 + Discount Rate)Period Number)

Video answer: Calculate the loan discount amount For example, to calculate discount factor for a cash flow one year in the future, you could simply divide 1 by the interest rate plus 1. For an interest rate of 5%, the discount factor would be 1 divided by 1.05, or 95%.

Discount Factor is calculated using the formula given below Discount Factor = 1 / (1 * (1 + Discount Rate)Period Number) Put a value in the formula. Discount Factor = 1 / (1 * (1 + 10%) ^ 2)

The formula is as follows: Factor = 1 / (1 x (1 + Discount Rate) ^ Period Number)

Calculate the discount rate if the compounding is to be done half-yearly. Discount Rate is calculated using the formula given below Discount Rate = T * [ (Future Cash Flow / Present Value) 1/t*n – 1] Discount Rate = 2 * [ (\$10,000 / \$7,600) 1/2*4 – 1]

The discount rate has to correspond to the cash flow periods, so an annual discount rate of r% would apply to annual cash flows. Time adjusted NPV formula: =XNPV(discount rate, series of all cash flows, dates of all cash flows) With XNPV, it’s possible to discount cash flows that are received over irregular time periods. This is particularly ...

Determine the interest rate on the loan and then express it as a decimal point. So for instance, if your rate is 6.75 percent, express it as.0675. Step 2 Divide the interest rate in decimal form by 365.25 days (the extra.25 represents a quarter day to account for leap years). 